Greenville Business Magazine November 2013 : Page 24

investing BY BRANDY WOODS SNOW In These Uncertain Times I We have seen the best performance in a nine-month period since 1997. t’s happened before, it’s happened again, and early next year could bring yet another occurrence – a budget crisis, debt ceiling anxiety, government shutdowns, a threatened credit rating downgrade, and politi-cal upheaval. In 1996, the government was shut down for more than 20 days, and, as recently as 2011, America’s credit rating was downgraded, leading to a three month slide in the market. The good news is that in both of these instances, a larger rebound occurred after the fact. Will we see history repeat itself in this respect as well? Or should investors be leery of the market and how their investment dollars are allocated? Should we pay attention to the firestorm of media doomsday rhetoric and save ourselves or block out the noise and focus intently on the long-term? HOW THE STOCKS STACK UP Both the economy and the stock market have rebounded to above pre-recession levels but, at this time, there are still approximately two million jobs less than that same time period. Unemployment levels are down and average wages and consumer spending are both showing modest growth at two-percent annu-ally. The international outlook for economic growth is favorable, and while there are many opportunities to invest in these developed markets, there is still some struggle in emerg-ing markets. In fixed income, long-term interest rates were volatile throughout Q3. Stocks did do well in Q3, though, and gave their best performance in nearly 17 years. “We don’t expect the catastrophic outcome the headlines suggest,” says Celinda Marshall, a financial planner at Edward Jones. “It’s been about two decades since we faced a govern-ment shutdown but there have been 17 since 1977, with stocks dropping in nine of these instances but rising during the other eight. The chal-lenges we faced then are very similar to the large budget deficits we see now. While a government shutdown is unfortunate, its economic impact is likely to be modest.” In fact, the stock market has continued to rise, with the S&P 500 rallying 23.6 percent year-to-date. We have seen the best performance in a nine-month period since 1997. International stocks have outper-formed domestic ones, and it is expected for the market to return to a typical up and down pattern. Jeremy Elliot, managing director with NFP, says consumer confi-dence (as measured by University 24 GREENVILLE BUSINESS MAGAZINE | NOVEMBER 2013